IMG slows down loading, even for visitors on fast connections, due to additional dns lookups and additional connections to load "offsite" images.

Also, IMG can be abused by people to log visitor's IPs and plant cookies.

And another problem, which we ran into during testing of http://baked.com (a new site) was that people post an image using IMG and then sometime later change it to something offensive; some sites, unknowingly to the poster, will automatically substitute an offensive image in place of the "hotlinked" image.

Ron